NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS JUL 9 2020

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: CARLO BONDANELLI, No. 19-55490

Debtor, D.C. No. 2:17-cv-06681-FMO ______________________________

PETER J. MASTAN, Chapter 7 Trustee of MEMORANDUM* the Bankruptcy Estate of Carlo Bondanelli,

Appellant,

v.

FRANCESCO TIENI; OCEAN PARK SRL,

Appellees.

Appeal from the United States District Court for the Central District of California Fernando M. Olguin, District Judge, Presiding

Submitted May 6, 2020** Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Before: GOULD and CHRISTEN, Circuit Judges, and STEIN,***1 District Judge.

Peter J. Mastan, the trustee of Carlo Bondanelli’s Chapter 7 bankruptcy estate,

appeals the district court’s order reversing the bankruptcy court and remanding to

dismiss his complaint for claim preclusion. We have jurisdiction under 28 U.S.C. §

158(d). Reviewing claim preclusion de novo, Robi v. Five Platters, Inc., 838 F.2d

318, 321 (9th Cir. 1988), and the bankruptcy court’s decision de novo, Rains v. Flinn

(In re Rains), 428 F.3d 893, 900 (9th Cir. 2005), we affirm.

Bondanelli and Francesco Tieni had a real estate venture. They purchased

two real estate properties via New West TC, LLC (New West). Relations soured

and Bondanelli sued Tieni, and they settled. According to the Settlement Agreement

(the Agreement), Bondanelli would sell the properties, Tieni would “cooperate

reasonably to effectuate [the sale], including [the] transfer/sale/dissolution of New

West,” and Bondanelli would pay Tieni $800,000. When Bondanelli signed this

Agreement, he had already sold the properties.

Bondanelli did not pay as promised. Tieni sought a judgment enforcing the

Agreement, and the district court entered the requested judgment. Bondanelli

*** The Honorable Sidney H. Stein, United States District Judge for the Southern District of New York, sitting by designation. 1 Judge Christen concurs in part and in the judgment, concurring only in Part II.

2 thereafter filed for Chapter 7 bankruptcy protection and Mastan was appointed as

trustee. Mastan brought an adversary proceeding against Tieni, seeking a

declaration that Bondanelli’s estate owned New West by virtue of the Agreement.

After a bench trial, the bankruptcy court so held. On appeal, the district court

reversed, holding the claim precluded.

I

We affirm the district court’s claim preclusion holding.

We apply California claim preclusion law. Semtek Int’l Inc. v. Lockheed

Martin Corp., 531 U.S. 497, 507–08 (2001). “Claim preclusion arises if a second

suit involves: (1) the same cause of action (2) between the same parties [or their

privies] (3) after a final judgment on the merits in the first suit.” DKN Holdings LLC

v. Faerber, 352 P.3d 378, 386 (Cal. 2015). The first two prongs are at issue.

First, Mastan’s claim that the Agreement mandated a transfer of New West is

the same cause of action as Bondanelli’s defense asserted by counterclaim against

the entry of judgment enforcing the Agreement. Bondanelli had expressly made the

same claim before the district court, and breach of contract claims within the scope

of the litigation may not be relitigated. See Tanasescu v. Kroger Co., No. G056119,

2019 WL 3335179, at *5 (Cal. Ct. App. July 25, 2019); Reile v. Live Stores, Inc.,

No. D066758, 2015 WL 6438352, at *6 (Cal. Ct. App. Oct. 23, 2015); 18 Charles

Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 4408

3 (3d ed. 2020) (“Contract cases often can be resolved by a simple rule that the first

suit must claim every breach that has then occurred.”).

Second, Mastan and Bondanelli are privies. The “general rule” is “that a

judgment rendered against a bankrupt prior to his bankruptcy is conclusive upon the

trustee.” Teltronics Servs., Inc. v. L M Ericsson Telecomms., Inc., 642 F.2d 31, 37

(2d Cir. 1981); see also 18A Wright & Miller, supra, § 4462

(“A trustee in bankruptcy, for example, is often bound by judgments against the

debtor . . . .”).2

In California, privity is determined by the virtual representative test. DKN

Holdings, 352 P.3d at 388. “‘The emphasis is not on a concept of identity of parties,

but on the practical situation’ . . . ‘deal[ing] with the a person’s relationship to the

subject matter of the litigation.’” Castillo v. Glenair, Inc., 232 Cal. Rptr. 3d 844,

856 (Ct. App. 2018) (first quoting Alvarez v. May Dep’t Stores Co., 49 Cal. Rptr. 3d

892, 900 (Ct. App. 2006); then quoting Cal Sierra Dev., Inc. v. George Reed, Inc.,

223 Cal. Rptr. 3d 506, 516 (Ct. App. 2017)), as modified on denial of reh’g (May

14, 2018).

2 “The trustee could also be viewed as the successor to the interests of the debtors in possession . . . . Successors in interest are bound by judgments just as are their predecessors in interest.” Knupfer v. Wolfberg (In re Wolfberg), 255 B.R. 879, 882 n.4 (B.A.P. 9th Cir. 2000), aff’d, 37 F. App’x 891 (9th Cir. 2002).

4 Here, both the general rule and the virtual representative test lead to the same

result, adverse to Bondanelli and his estate. Mastan’s interest is sufficiently aligned

with Bondanelli’s in the earlier litigation such that Mastan would reasonably expect

to be bound by the earlier judgment. See DKN Holdings, 352 P.3d at 378–88; see

also Gottlieb v. Kest, 46 Cal. Rptr. 3d 7, 35 (Ct. App. 2006). Practically speaking,

a contrary result would yield Bondanelli’s interest two bites of the apple.

II

Alternatively, we reverse the bankruptcy court because the Agreement’s terms

were clear, and its plain meaning defeated the trustee’s claim that the Agreement

transferred Tieni’s interest in New West to Bondanelli. The bankruptcy court

considered extrinsic evidence in a three-day trial to interpret the parties’ intended

resolution of their dispute. Whether or not the parties intended that ownership of

New West would ultimately be transferred, the Agreement was unambiguous:

Tieni’s cooperation was necessary to effect a future sale of the property. The

Agreement itself clearly did not transfer Tieni’s interest in New West. Because the

bankruptcy court held otherwise, it erred.

AFFIRMED.

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